Orange FY 2013 results Stéphane Richard, Chairman and CEO Gervais Pellissier, Deputy CEO and CFO March 6th, 2014
agenda 1 2013 highlights 2 2013 financial and business performance 3 2014 outlook and conclusion 3 FY 2013 results – March 6th, 2014
1 2013 highlights Stéphane Richard Chairman and CEO
FY 2013 performance* revenues (€bn) operating cash flow (€bn) 41.0 -4.5% -2.6% excl. reg. 7.0 -11.4% EBITDA** (€bn) net income Group share (€bn) as % of revenues 12.6 -7.5% 30.9% -1.0pt 1.9 x2.3 CAPEX (€bn) as % of revenues 5.6 -2.0% 13.7% +0.4pt * yoy evolution in comparable basis 5 FY 2013 results – March 6th, 2014 ** in this presentation, EBITDA always refers to “restated” EBITDA unless specified
net debt / EBITDA* 2013 around 2.2x** OpCF ≥ €7bn end of 2013 2013 targets 2013 selective portfolio dividend ≥ 0.80 € review achieved … * calculated by dividing (A) net financial debt, including 50% of the net financial debt of the EE JV in the U.K., by (B) restated EBITDA including 50% of the EBITDA of EE JV 6 FY 2013 results – March 6th, 2014 ** excluding tax litigation
operating cash flow guidance achieved € 7,019m 2013 € 7 bn Operating Cash Flow of at least 7 FY 2013 results – March 6th, 2014 Operating Cash flow = restated EBITDA-Capex
balance sheet strength preserved 2.37x 2.21x 2.17x 2013 2 .2x net debt / EBITDA* around 2012 2013 2013 actuals excluding tax litigation * excluding 2005 tax litigation 8 FY 2013 results – March 6th, 2014
dividend policy adapted to cash generation 2013 € 0.80 dividend ≥ €0.30 interim paid on December 11, 2013 balance of €0.50* to be paid in June * subject to the Annual General Meeting of Shareholders approval; ex-date June 2nd, record date June 4th, payment date June 5th 9 FY 2013 results – March 6th, 2014
portfolio review focused on existing footprint, while respecting leverage ratio guidance signings in 2013: + acquisition of remaining 51% of Dailymotion − disposal of Orange Austria selective portfolio − disposal of Etrali − disposal of Sonaecom review − disposal of Orange Dominicana related cash impact* − disposal of Wirtualna Polska in €m − disposal of Arkadin ~1, 1,000 000 13 13 2013 2014 10 FY 2013 results – March 6th, 2014
agile marketing modernization and segmentation digitalization of the driving commercial company momentum … thanks to 4 sustained level of strong employee investments engagement levers 11 FY 2013 results – March 6th, 2014
accelerating commercial momentum in mobile with 4G take off confirmed mobile contract net adds (excl. M2M, in thousands) 1m 4G customers at the end of 2013 best year since 2009 in contract net adds (+699k FY13 / +316 Q4’13) France +558 63% of gross adds in Q4 on premium offers (+8pts yoy) Spain Poland +10% yoy mobile contract base growth +1.8 pts* in contract market share in 2013 (#2 in residential) > 500k 4G customers, leading 4G market (>100k monthly run rate) +169k contract net adds in Q4, highest result since 2009 nju.mobile brand success underscored by 353k clients Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 +5.6% yoy mobile contract base growth and 2m 4G customers, one of the fastest adoption rates in the world 2012 2013 ~9m Orange Money customers ( x1.6 yoy) +5.7% customer growth in Rest of the World >100m** mobile customers in Africa & Middle East at the end of 2013 FY 2013 results – March 6th, 2014 * CNMC Q3 13 report ** including 100% of customers in affiliates consolidated under equity method 12
fixed broadband dynamism sustained by convergence and network investments broadband net adds Oran ange T e TV (in thousands) +156 156 319k FTTH customers end of 2013 (x1.8 yoy; Q4 at +17% vs Q3) 3.4m Open customers Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 38% * VHBB conquest share over 2013 as % of BB convergent base customers (in thousands) #2 in volume BB market share since Q3 2013 (+1.3 pts** yoy) 4,841 12% +21% yoy broadband base growth 67% highest ever ADSL net adds (+98k) in Q4 34% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 286k Open customers (x9 yoy) 58% of new Open customers buy an additional fixed or mobile service 2012 2013 PSTN lines loss reducing ( -345k in 2013 vs. -590k in 2012) France Spain Poland * company estimates ** CNMC Q3 13 report FY 2013 results – March 6th, 2014 13
accelerating the modernization of the company to mitigate revenue pressure yoy change in Group Opex base revenue decline offset by opex savings (in €m) (in % of revenue decline) -37 Group France 57% -129 -197 -182 -346 -219 48% -312 23% 17% -421 initial target -441 > €600m 8% -583 -3% -617 2011 2012 2013 -929 29 Q1 13 H1 13 9m 13 FY 13 indirect costs 86% share of France in total FY 2013 Opex reduction direct costs FY 2013 results – March 6th, 2014 14
increased CAPEX on 4G and FTTH to support future growth investment in very high speed networks x2 yoy CAPEX evolution (CAPEX evolution over 2013, in €m) (in % yoy) end of 2013 > 4,200 4G sites, covering 50% of population xx% CAPEX as % of revenues 2.6m FTTH homes connectable +4.5% 5m VDSL-ready lines +98 -444 > €0.5bn CAPEX dedicated to VHBB +233 FTTH > 1,600 4G sites, covering 30% of population VDSL +18.8% ramp up of FTTH in partnership with Vodafone 5,744 5, 744 (800k homes connectable by end of Q1 14) 4G 5, 5,631 631 completion of memorandum with UKE mutualisation, 13.4% 13.7% rationalization 8,200 sites shared with T - Mobile of which 877 4G - 18.2% & phasing out sites covering 16% of population 2012cb 2013 2.9m VDSL-ready lines 3G in 17 countries out of 21 Africa & Middle East countries -6.0% 4G already launched in several countries, including Luxembourg, Moldova and Romania 15 FY 2013 results – March 6th, 2014
strong employee engagement facilitating the modernization of the company ongoing improvement in French employee satisfaction top employer awards received in 2013 92% France 90% Spain 88% Poland 84% UK (OBS) Belgium 79% Romania Slovakia Senegal Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 Ivory Coast Uganda % of Orange employees who declared that their working Mali environment was at least as good as in other companies Egypt (OBS) 16 FY 2013 results – March 6th, 2014
2 2013 financial and business performance Gervais Pellissier Deputy CEO and CFO
2 .1 2013 Group financial performance
FY 2013 performance Q4 13 var. FY 13 var. in €m actual cb actual cb key points >40% of revenue decrease (-€1,9bn vs. 2012) revenues 10,216 -5.1% 40,981 -4.5% is due to regulation 236m customers, +3.8m in Q4, with momentum confirmed in France, Spain and excl. regulation - 3.8% -2.6% Poland restated EBITDA* 2,867 - 7.8% 12,649 -7.5% regulatory impact: -€279m over the year opex down by €929m, of which €346m come from indirect costs in % of rev. 28.1% - 0.8pt 30.9% -1.0pt CAPEX 1,882 -10% 5,631 -2.0% almost €535m FTTH & 4G in France 50% 4G population coverage and 2.6m FTTH homes connectable (+55% yoy) in France in % of rev. 18.4% -1.0pt 13.7% +0.4pt operating cash flow consistent with FY guidance 984 -3.4% 7,019 -11.4% (restated EBITDA* – CAPEX) *see slide 45 for EBITDA restatements €7bn OpCF guidance achieved 19 FY 2013 results – March 6th, 2014
Africa & Middle-East European countries Q4 and FY 2013 revenues slight increase in fourth quarter revenue contraction as mobile retail and convergent offer repricing moves through our customer base focus on Q4 revenue trend France %yoy % yoy drop in mobile services revenues trend revenues - in €m Q4 13 cb ex.reg FY 13 cb ex.reg − ongoing drop in blended ARPU following Q2 repricing Group 10,216 -5.1% -3.8% 40,981 -4.5% -2.6% − increasing importance of Open offers France 4,954 -7.0% -6.2% 20,018 -6.6% -4.8% slower yoy contribution from national roaming & wholesale steady trend in fixed services Spain 992 -1.9% +2.7% 4,052 +0.6% +4.4% Spain Poland 755 -9.4% -4.0% 3,079 -8.6% -3.9% sharp fall in market prices and business model shift towards SIMO with slowdown in mobile services revenues, offset by growth in handset sales Resr of the World 1,971 -1.9% -0.8% 7,792 -0.5% +1.3% strong but slower growth in Fixed (increasing importance of discounted convergent offers) 795 -10.9% -9.2% 3,195 -6.2% -2.8% Poland steady underlying trend in Q4 revenue once adjusted for a one-off ICT equipment 1,044 +6.1% +6.6% 4,060 +4.3% +4.7% sale in Q4’12 Enterprise 1,658 -4.5% -4.5% 6,513 -5.3% -5.3% Rest of the World high level of competitive pressure in Belgium with Q4 revenues down by -21% IC&SS 428 +3.5% +3.5% 1,702 +5.2% +5.2% following the launch of new tariffs in the summer favorable growth in Romania at +4.9% yoy sustained by mobile data elims -542 -2.8% -2.8% -2,175 -1.9% -1.9% strong performance in emerging markets over Q4 OBS strong Q4 in Enterprise revenues driven by an increase in non-equipment services revenues 20 FY 2013 results – March 6th, 2014
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